President Barack Obama is primed to push for returning jobs
from overseas in tonight’s State of the Union Address -- his
last before he faces voters in November -- while Republicans
seeking to replace him are trying a harsher line. They are
vowing to label China a currency manipulator and are talking
about a trade war. With a $273 billion trade deficit with China
in 2010 and U.S. unemployment at more than 8 percent, China, the
world’s second-largest economy, is an easy target for blame.

While assuming the politicians are just using “campaign
rhetoric,” Chinese leaders can’t be sure, said Cheng Li, a
senior fellow at the Brookings Institution in Washington. China
becomes a greater economic threat to the U.S. after each
election, and China can no longer assume that the remarks are
just used to fire up a candidate’s supporters, he said

“It’s game-changing, and China’s no longer a small
player,” Li said. “Politicians like to blame others, but they
have to be careful. There could be a backlash.”

While not using the language of his Republican rivals,
Obama filed five World Trade Organization complaints since
taking office three years ago, compared with the seven that
George W. Bush filed from 2001, when China joined the WTO, and
the end of his term in 2009.

Tire Duties

Obama slapped duties on Chinese-made tires, a step Bush
never took. The U.S. has other investigations in progress, and
the department said last week it would investigate Chinese
makers of wind towers after the Wind Tower Coalition claimed
China sells renewable-energy equipment in the U.S. below fair
value.

Xi Jinping, China’s vice president, is scheduled to visit
Obama in Washington on Feb. 14 to discuss bilateral and regional
issues, according to a White House statement yesterday. He also
will visit Iowa and California.

Presidential candidates in prior elections have targeted
China for economic and human-rights concerns. Democrat Bill
Clinton campaigned in 1992 saying incumbent George H.W. Bush
coddled the “butchers of Beijing” who ordered the 1989
crackdown on democracy supporters in Tiananmen Square. George W.
Bush in 2000 said he would recast U.S. policy to treat China as
a “strategic competitor,” not as a partner.

‘Punching Bag’

“China is a convenient punching bag and some candidates
can’t resist taking a few swings,” said Nicholas Lardy, a
fellow at the Peterson Institute for International Economics in
Washington. “But you get in the White House and discover the
stakes with China, and the campaign rhetoric goes by the
wayside.”

After early tensions, including the collision of a U.S. spy
plane and a Chinese fighter jet, Bush, focused on the Sept 11
terrorist attacks, eased his rhetoric, urging China to
appreciate the value of its currency without forcing the issue.

In his 2008 campaign, Obama said China manipulated its
currency and vowed to use all means to force change. More than
three years later, he has declined to act against China.

The U.S. Treasury Department said Dec. 27 in its twice-yearly report on global currencies that China’s yuan is
substantially undervalued and the U.S. will “press for policy
changes that yield greater exchange-rate flexibility.”

China’s state-run Xinhua News Agency replied in a
commentary that the U.S. should move beyond the “useless,
meaningless” quarrel over the exchange rate.

‘Like a Fiddle’

The U.S. Senate voted in October on a measure aimed at
punishing China for maintaining an undervalued currency. The
House hasn’t taken up the legislation and Obama doesn’t have a
position on the measure.

“People who have looked at this in the past have been
played like a fiddle by the Chinese,” Mitt Romney, the
Republican presidential candidate and former Massachusetts
governor, said in an Oct. 11 debate. “The Chinese are smiling
all the way to the bank, taking our currency and taking our jobs
and taking a lot of our future.”

It isn’t just currency spurring Republican ire with China.
Failure to protect U.S. intellectual property and interests has
been used in campaign speeches.

“I think we’re going to have to find ways to dramatically
raise the pain level for the Chinese cheating,” Newt Gingrich,
the presidential candidate and former U.S. House speaker, said
in an Nov. 9 debate. Action is needed against computer hackers
and those who steal intellectual property, Gingrich said.

Reversing Course

Wang Baodong, a spokesman for the Chinese embassy in
Washington, didn’t respond to a message seeking comment on the
campaign comments.

The Republican candidates haven’t said anything about China
or the nation’s policies that pose difficulty in reversing
course, Stephen Wayne, a political science professor at
Georgetown University in Washington, said in an interview.

China isn’t enough of a campaign issue that the public will
hold the candidates to promises they make, such as George H.W.
Bush’s 1992 “read my lips, no new taxes” pledge, Wayne said.
Voters this year are more concerned about jobs, he said.

U.S. industries say the government isn’t doing enough to
let companies compete with China. SolarWorld AG’s U.S. unit
claims the solar-energy industry is being harmed by China’s cash
grants, discounts on raw materials, preferential loans and tax
incentives. The U.S. is investigating the complaint.

Geithner, Bernanke

U.S. Treasury Secretary Timothy F. Geithner has said a rise
in the yuan’s value since mid-2010, at 10 percent, is too slow.
Failure to allow faster appreciation impedes a shift in demand
toward emerging markets that would bolster the global economy,
U.S. Federal Reserve Chairman Ben S. Bernanke said.

The currency contributed to a $26.9 billion trade deficit
the U.S. had with China in November, more than half the total
$47.8 billion gap with all nations.

“They will recognize that if they cheat, there is a price
to pay,” Romney said in an Oct. 11 debate. “We’re not going to
have a trade war, but we can’t have a trade surrender either.”

Rick Santorum, a former Pennsylvania Republican senator and
presidential candidate, said, “I don’t want to go to a trade
war, I want to beat China.”

China’s leaders have gotten more savvy about U.S.
campaigns, said David Spooner, a lawyer with Squire Sanders and
a former assistant Commerce secretary for import administration.

“The Chinese government can get alarmed at the general
atmosphere, but I don’t think they take what any one candidate
seriously,” Spooner said. “They think to themselves, we have
seen this play before. Once the election is over, whoever is
elected, tones down the rhetoric.”

Candidates such as Romney talk tough, though there is
little likelihood he will carry out his promise to stand up to
China and label it a currency manipulator, Wayne said.

“They create a straw man to knock down -- a boogeyman,”
Wayne said. “They create foes to project a strong image. It
used to be Russia and now it’s China.”